P.r.ganapathy v. The Commissioner Of Income Tax -1

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.No.8658 of 2014 and M.P.No.1 of 2014 P.R.Ganapathy .. Petitioner vs. 1.The Commissioner of Income Tax -1 No.67-A, Race Course Road, Coimbatore 641 018. 2.The Income Tax Officer, Ward – II(5), No.63, Race Course Road, Coimbatore. .. Respondents Writ Petition filed under Article 226 of theConstitution of India, to issue a Writ of CertiorarifiedMandamus to call for the records relating to the impugnedorder of the 1[st] respondent in C.No.129(53)/CIT-I: CBE/2012-13dated 05.10.2012 insofar as the non-payment of interest aloneis concerned and the consequential communication dated13.08.2013 in C.No.129(53)/CIT/I: CBE/11-12 and quash the sameand further direct the respondents to grant the interest from01.04.2000 to 03.04.2013, of the refund of TDS amount ofRs.12,66,569/- which was illegally collected from thepetitioner during the assessment year 1999-2000. O R D E R The petitioner was allotted shares by his employer. Taxwas demanded from the petitioner’s employer on the ground thatthe employer failed to make Tax Deductions at Source (TDS).The issue was taken up by the employer in appeal. 2. The Income Tax Appellate Tribunal, Bangaloreultimately answered the issue in favour of the petitioner’shttps://hcservices.ecourts.gov.in/hcservices/employer holding that the petitioner’s employer was not required to make Tax Deduction at Source on the sharesallotted to its employees vide its Final Order No.818-820/2000dated 28.6.2002. 3. Further, an appeal before the High Court and theSupreme Court have confirmed the aforesaid order of the IncomeTax Appellate Tribunal. 4. However, during interregnum proportionate amount oftax which was demanded by the Income Tax Department was paidby the petitioner’s employer and debited by the employeragainst payable to the petitioner. 5. The petitioner therefore filed the revised return forthe assessment year 1999-2000 and requested for refund of theamount paid as tax together with interest. 6. The 1[st] respondent by the 1[st] mentioned impugnedproceeding dated 5.10.2012 ordered refund of tax paid by thepetitioner’s employer alone without interest. 7. It is the case of the petitioner that the petitioneris entitled to interest under Section 244 A of the Income TaxAct, 1961. Therefore, the petitioner once again approachedthe 2[nd] respondent with a request to revise the order ofassessment by rectifying the same for the assessment year1999-2000. 8. On 3.7.2013, the petitioner sent representation andrequested for interest on delayed refund of amount. Thepetitioner enclosed copies of the decision of the HonourableSupreme Court, Karnataka High Court in the case of thepetitioner’s employer and that of this Court in W.P.No.2504 of2010 dated 12.3.2010 wherein the interest was directed to bepaid under a somewhat similar circumstances. 9. In the 2[nd] mentioned impugned order dated 13.8.2013,1[st] respondent has rejected the request without any reasoningand has merely stated that the request of the petitionercannot be considered. 10. Heard the learned counsel for the petitioner and therespondents. 11. The learned counsel for the petitioner submits thatpayment of interest under Section 244 A of the Income Tax Act,1961 is axiomatic consequential to refund and the departmenthttps://hcservices.ecourts.gov.in/hcservices/has no choice but to pay interest on delayed refund of tax. 12. The learned counsel further submits that the issuesnow covered by the decision of this Court rendered inW.P.No.2504 of 2010 in its order dated 12.3.2010. 9. In the 2[nd] mentioned impugned order dated 13.8.2013,1[st] respondent has rejected the request without any reasoningand has merely stated that the request of the petitionercannot be considered. 10. Heard the learned counsel for the petitioner and therespondents. 11. The learned counsel for the petitioner submits thatpayment of interest under Section 244 A of the Income Tax Act,1961 is axiomatic consequential to refund and the departmenthttps://hcservices.ecourts.gov.in/hcservices/has no choice but to pay interest on delayed refund of tax. 12. The learned counsel further submits that the issuesnow covered by the decision of this Court rendered inW.P.No.2504 of 2010 in its order dated 12.3.2010. 13. Per contra, the learned counsel for the respondentsreiterate that both the impugned orders are well reasoned andrequires no interference. The learned counsel further submitsthat the decision of this Court rendered in W.P.No.2504 of2010 vide its order dated 12.3.2010 is not applicable to thefacts and circumstances of the case and therefore prayed fordismissal of the present writ petition. 14. I have considered the submissions of the petitionerand the respondents. The tax was paid by the petitioner’semployer pursuant to collateral proceedings initiated againstthe employer for alleged failure to make Tax Deductions atSource (TDS). 15. This issue was taken up before the appellateauthorities and its now stands concluded that the petitioner’semployer was not required to make Tax Deductions at Source onthe shares allotted to the petitioner. Therefore, any amountpaid by the employer during the pendency of such proceedingswas liable to be refunded together with interest. 16. In this case, the amount paid by the petitioner’semployer alone has been refunded back without interest vide 1[st]mentioned impugned order of the 1[st] respondent dated 5.10.2012.There is however no discussion as to why the interest underSection 244 A of the Income Tax Act, 1961 was not payable tothe petitioner. 17. The Honourable Supreme Court in Sandvik Asia Ltdversus Commissioner of Income Tax has ordered payment ofinterest in case of delayed payment of refund. There it washeld amount paid during pendency of the appeal are to beconsidered as deposits and therefore they should be refundedback together with interest. 18. Further, Sub-clause (1) (a) to section 244 A of theIncome Tax Act, 1961 permits interest on delayed payment ofrefund. That being the case, the petitioner is justified inasking for interest on delayed refund of tax that was paid byhis employer which has been held to be not payable by theemployer. Further, once there is a refund and if there is adelay, interest is payable by the employer. There is no basisfor denying interest on such delayed refund of the amounts.https://hcservices.ecourts.gov.in/hcservices/ 19. Under these circumstances, I am of the view that thepetitioner has made out sufficient case for interfering withthe impugned orders of this Court to give a positive directionto the respondents to pay interest to the petitioner on suchdelayed refund of the amount. 20. Accordingly, this writ petition stands allowed withconsequential relief to the petitioner. No cost.Consequently, connected miscellaneous petition is closed. Sd/-Assistant Registrar(CO)//True copy//Sub Assistant Registrarlbm/kkdTo1.The Commissioner of Income Tax -1 No.67-A, Race Course Road, Coimbatore 641 018.2.The Income Tax Officer, Ward – II(5), No.63, Race Course Road, Coimbatore. +1cc to Mr.K.Soundararajan, Advocate SR.No.102141 +1cc to Mr.AP.Srinivas, Advocate SR.No.102289 W.P.No.8658 of 2014 and M.P.No.1 of 2014 PA(CO)GMY(03/02/2020) https://hcservices.ecourts.gov.in/hcservices/